Restructuring of Greek Banks Wraps Up in 2024

Analysts and banking insiders predict that 2024 will be a pivotal year for Greek banks, as the final phases of its restructuring are anticipated to conclude by this fall.

After years of significant transformation, the sector is expected to once again support the real economy with financial resources and deliver value to shareholders of credit institutions.

Systemic banks have made considerable progress in recent years, but 2024 is viewed as a landmark year due to several key developments.

First, all systemic banks, where the state—via the Hellenic Financial Stability Fund (HFSF)—had held substantial stakes during the decade-long crisis, will have returned to private ownership.

This process is complete for Alpha Bank, Eurobank, and Piraeus Bank, and partially for National Bank, where the state retains an 18% stake. However, full state exit is expected by October, with preparations already in progress.

Second, competition is set to increase with the formation of a fifth significant player in the banking system through the merger of Attica Bank and Pancreta Bank.

This new entity will provide an additional non-systemic option for depositors and borrowers, alongside the rapidly expanding Optima Bank. The legal merger is anticipated by early October, with a subsequent swift operational integration.

A capital increase of about 730 million euros will follow. Of this capital injection, 100 million euros will repay a Tier 2 bond issued by the Greek government, while 630 million euros will clean up the banks’ balance sheets and support the new entity’s growth.

Furthermore, for the first time in 16 years, Greek banks received regulatory approval to distribute dividends from last year’s profits. The reduction of non-performing exposures to near-European averages, strengthened capital and liquidity, market reconnection, increased profitability, and positive macroeconomic outlooks created the right environment for this approval.

This summer, the four systemic banks and Optima Bank distributed approximately 850 million euros in cash, representing 23% of 2023 profits, with Alpha Bank’s 61 million euros share buyback program still pending.

What is more, net profits in the sector for 2024 are projected to reach around 4.5 billion euros, marking the best performance in 11 years. Alpha Bank, Eurobank, National Bank, and Piraeus Bank are likely to record historical highs in profitability, paving the way for even greater shareholder rewards in 2025, with 35% of 2024 profits expected to be returned.

Finally, systemic banks have regained investment-grade status for the first time since Greece’s debt crisis began. This milestone achievement re-establishes them within the “normal” banks’ club, broadening their investor base and supporting management teams’ efforts to expand assets under favorable conditions.

Source: tovima.com